A Wal-Mart supplier accused of sweatshop

Once a paragon of Red State values, it's being criticized for bowing to political correctness.

Daniel McGinn
NEWSWEEK
May 31, 2008                            [back to top] 

For investors, most annual meetings are anything but a hot ticket. They're typically held in small auditoriums and feature an agenda that makes C-Span look like an action thriller. Then there's Wal-Mart, the Arkansas-based retailer whose shareholder meetings are celebrity-packed, high-wattage showcases. Last year's gathering featured the comedian Sinbad and musical numbers by Jennifer Lopez and the cast of "High School Musical." But amid these surprise performances, the most unexpected moment came when shareholder activists were each given three minutes at the podium. Most offered run-of-the-mill liberal criticisms that hit every large company: a Roman Catholic nun urged Wal-Mart to support universal health insurance; several speakers suggested the company rein in executives' huge paychecks. But from the other end of the spectrum came Peter Flaherty, lambasting Wal-Mart for being too nice to unions, too concerned about the environment and too accommodating to gays and lesbians. "People shop at Wal-Mart because of low prices, not because the company is politically correct," Flaherty shouted at the crowd.

Come again? With its deep roots in Red State America and a reputation for upholding "family values," Wal-Mart seems an unlikely target for conservative criticism. It's the company that banned sales of CDs with offensive lyrics, refused to stock racy magazines like Maxim and declined (until 2006) to sell the Plan B emergency contraceptive pill. But in recent years, as it faced growing pressure from liberal activists, Wal-Mart has begun to make changes. It began offering more-robust health-insurance coverage to workers. Its CEO voiced support for raising the minimum wage. It has launched an ambitious environmental program. As a result, while Wal-Mart continues to face criticism from liberal groups, it's now simultaneously being criticized by some conservatives, who say the company's concessions to liberals are hurting its business. "This is kind of a guerrilla fight," says Flaherty, who heads a tiny right-wing think tank called the National Legal and Policy Center (NLPC), which holds just a few thousand dollars in Wal-Mart stock.

Shareholder activism has been around since the 1940s, when the SEC first began letting investors file resolutions. At first, most shareholders focused on bottom-line issues, but in the late 1960s, Vietnam War protesters began filing resolutions against companies that provided materials (including napalm) for the war. By the 1980s, activists had become a fixture at annual meetings, speaking out on issues like companies' investments in South Africa or the use of sweatshop labor. While conservative pro-life groups have occasionally filed proxy resolutions, says researcher Beth Young of the Corporate Library, shareholder activism has been dominated by liberal interests.

Now that's changing. Flaherty, a former grass-roots organizer for Ronald Reagan, argues that conservatives have been slow to recognize that today it's corporations, not government, that drive many big social changes. That's been true recently on issues like gay rights, health-care costs and the environment. So since 2006, Flaherty and the five-person staff at NLPC have been filing proposals and attending annual meetings. So far this spring, they've spoken at the shareholder meetings of General Electric, Boeing and Anheuser-Busch; next week they're at United Airlines. And they're not alone: the right-leaning Free Enterprise Action Fund (FEAF), a tiny libertarian mutual fund, filed resolutions with 20 companies this spring, including Wal-Mart. Most of the FEAF resolutions argue that companies should be more skeptical and resistant as environmentalists push them to reduce their carbon footprint. Some investors apparently agree: at last week's ExxonMobil meeting, where a group of Rockefeller heirs unsuccessfully urged the company to broaden its focus on renewable energy, a speech by FEAF manager Steve Milloy received loud applause.

Environmental issues are at the heart of Flaherty's complaints about Wal-Mart, too. In a 46-page report the NLPC will release this month, staffer John Carlisle writes that Wal-Mart customers aren't buying many of the organic products it's begun stocking; that the energy-efficient compact fluorescent light bulbs it's been touting aren't really good for the environment (because they contain mercury), and that its support for legislation to cap carbon emissions will only hurt consumers and its bottom line. (Wal-Mart responds that its environmental initiatives "are not only good for the environment—they are good for our business, too.") The NLPC says Wal-Mart is naive to think incremental compromises will ever really placate liberal critics. "The more Wal-Mart tries to appease the Left, the more the Left demands," the report concludes.

While most corporations look on them as gadflies, shareholder activists occasionally do bring about change. Many U.S. companies divested South African holdings under pressure in the 1980s, for instance. But most shareholder resolutions garner very few votes, and Flaherty's group is getting limited traction so far; its resolution against Wal-Mart didn't get enough votes last year, so it lost its spot on the agenda at Wal-Mart's 2008 meeting, which takes place this week. Some observers think political discussions don't belong at annual meetings in the first place. "The corporate ballot box is not the best place to have debates on broader social topics," says Charles Elson, a University of Delaware governance expert. But as long as businesses grapple with fast-rising health-care costs, the growing concern over the environment and other hot-button political issues, corporate meetings will likely see more strange bedfellows indeed.

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Does Wal-Mart sell inferior goods?

By Justin Wolfers,
NY Times- Freakonomics Blog
May 30th, 2008                                       [back to top] 

Are Wal-Mart’s Products Normal?

Emek Basker is an incredibly creative (and under-appreciated) industrial organization economist. She is also surely the leading Wal-Mart-ologist, and has been studying big box stores for several years.

Her most recent piece provides a very nice teaching example highlighting the importance of the income elasticity of demand; she also managed the perfectly accurate but cheeky turn of phrase that we all dream about sneaking into an academic paper: In this note, I estimate the income elasticity of revenue for Wal-Mart and Target over the last ten years. Because some consumers are likely to view each discounter’s products as normal while others view them as inferior, the aggregate relationship could go either way and depends on the size of the two groups as well as on the magnitude of their elasticities of demand (positive and negative).

I find that demand for Wal-Mart’s products exhibits a negative income elasticity and Target’s demand exhibits a positive income elasticity … For the average consumer, then, it appears that shopping at Target is perfectly normal, but shopping at Wal-Mart is not.

Given these findings, perhaps Rob Jensen’s Giffen good expedition team needs a Wal-Mart-ologist. Oh, and in case you are wondering how Target and Wal-Mart are doing, here are their latest stock price movements: Given Basker’s estimates, it is probably no surprise that the current slowdown is good news for Wal-Mart, but bad news for Target.

It turns out that Basker’s findings are no surprise to Wal-Mart: In October 2007, CEO Lee Scott argued that “Our low prices and low-cost business model should give us an advantage over other retailers if things get more difficult for consumers.”

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Tenn. withdraws from Wal-Mart energy audit program

By AP,
CNN Money
May 28th, 2008                       [back to top]

NEW YORK (Associated Press) - Tennessee has withdrawn from a partnership with Wal-Mart that would have made its state capitol the first to undergo an extensive energy audit by the nation's largest retailer, state and company officials said Wednesday.

Earlier this month Wal-Mart Stores Inc. announced partnerships with 19 states and Puerto Rico to help find ways to cut energy costs at their state capitols.

"The governor's office notified us that they were withdrawing from the program, and that's all we know," Wal-Mart spokesman Dennis Alpert said.

"We had already started the conversations with the governor's office and staff to make it the first," he said. "It was probably going to take place in mid-June."

Under the program announced May 6 at the National Governors Association's State Summit on Clean Power and Efficiency, engineers paid by Wal-Mart will visit the capitol facilities to examine lighting, heating, ventilation, air conditioning systems, refrigeration equipment and building structures.

"We're supportive of Wal-Mart's broader initiative," Will Pinkston, senior adviser to Tennessee Gov. Phil Bredesen, said in an e-mail. "But we've had a couple of false starts that probably were unique to Tennessee, and we've run into some unrelated issues that frankly complicated things." Pinkston did not elaborate on those issues.

"All things considered, we're just going to move in a different direction right now," he said.

Bredesen, a Democrat, has separately created an energy task force to examine ways to improve Tennessee's energy performance.

The other states that have signed up for Bentonville, Ark.-based Wal-Mart's program include Arkansas, Connecticut, Florida, Iowa, Kentucky, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, Ohio, Pennsylvania, South Carolina, South Dakota, Virginia and West Virginia.

Minnesota's Republican Gov. Tim Pawlenty said at the May announcement that the public-private partnership was an example of how governors can lead an effort to become greener. "The cleanest and cheapest energy is the energy we save," he said.

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Girl stung by scorpion in Wal-Mart watermelon

Associated Press
May 27th, 2008                       [back to top]

BARBOURSVILLE, W.Va. (AP) — One young shopper at a Wal-Mart in West Virginia had to watch out for more than falling prices.

A 12-year-old girl picking up a seedless watermelon from a bin was stung Sunday by a tan, inch-long scorpion that had apparently stowed away in a shipment from Mexico.

Megan Templeton, of Barboursville, was taken to the hospital as a precaution but later released. Her father, William Templeton, said the pain was a little worse than a bee sting.

He initially didn't believe his daughter when she said she had been stung by a scorpion, but then he saw the critter scurry underneath a box. It was captured by Wal-Mart employees.

Most of the nearly 2,000 kinds of scorpions are not dangerous to humans.

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Wal-Mart executive vice president sells shares

The Associated Press
May 27, 2008                                      [back to top]

NEW YORK An executive vice president of discount retailer Wal-Mart Stores Inc. sold 71,450 shares of common stock, according to a filing with the Securities and Exchange Commission.

In a Form 4 filed with the SEC Friday, Eduardo Castro-Wright reported selling the shares on Wednesday and Thursday for $56 apiece.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Wal-Mart is based in Bentonville, Ark.

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The worst mistake by Walmart

SAP will be devastating replacing its homegrown IT version

Susan Hicks
India Daily
May 26, 2008                         [back to top]

It is the tale of non-tech companies failing to understand the effect of mismanaged and undocumented IT development gown in-house. Even worse mistake is to try and replace the same with enterprise system software like SAP.

SAP can do little to control the organizational indiscipline and lack of competence among the employees of this corporation. What WalMart should have done is to first reengineer the IT system, reform its IT level organizational problems and then bring in external software systems like SAP.

What SAP will do is to first take away the freedom of development. It can be good for an organization that has corrected the root causes of troubles (indiscipline) through reengineering existing systems. They will try and create the same flaws within SAP, spend much more money and after five years, blame SAP.

Port Authority of NY and NJ and World bank in Washington DC. are an ideal examples. They bought into SAP four years back. They stopped talking to other vendors and spread an impression that software like SAP, PeopleSoft or Oracle Financial will solve all their problem and make them reach ‘Nirvana.’

Four years later they are back into their old habits. They now spend much more money. They blame these enterprise level software for all their troubles. The meta-development still lacks documentation and rigorous processes.

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Pet-Food Companies Settle Lawsuit

Wall Street Journal
May 24th, 2008                                 [back to top]

A group of about 30 companies sued over contaminated pet food linked to the deaths of perhaps thousands of dogs and cats have agreed to pay $24 million to pet owners in the U.S. and Canada.

The deal would affect people who incurred expenses directly related to the illness or death of a pet linked to the food, which was at the center of the biggest-ever U.S. pet-food recall in 2007. Many affected pet-food makers are still trying to win back previously loyal users who switched brands following the recall.

Among the companies settling the suit are Menu Foods Income Fund; Procter & Gamble Co., which makes Iams pet food; Colgate-Palmolive Co., maker of Hill's; Nestlé SA, maker of Purina; and Mars Inc., maker of Pedigree. Retailers including Wal-Mart Stores Inc., Target Corp., Petco Animal Supplies Inc. and Pet Smart Inc. were also part of the suit.

Nearly 300 people sued the companies in state and federal courts. They and perhaps thousands of other pet owners would be eligible for payments under the deal. The settlement is detailed in papers filed late Thursday in U.S. District Court in Camden, N.J. It still needs a judge's approval. A court hearing on the settlement is scheduled for Friday.

"We think it's a strong settlement legally and economically for affected pet owners in the wake of a terrible tragedy," said Russell Paul, a lawyer for plaintiffs in the suit.

"We are fully supportive of the agreement and confident that this matter is moving toward a resolution," said a Mars spokeswoman. P&G said that since the recall, it has changed its ingredient sourcing and relaunched affected wet foods with new packaging and improved formulas.

The pet food was discovered to contain wheat gluten imported from China that was contaminated with melamine, a chemical used to make plastics. Menu Foods was the first company to issue recalls.

Some of the companies have already paid out more than $8 million to people whose pets were sickened or died after eating the contaminated food.

Under terms of the deal, pet owners could be reimbursed for all reasonable expenditures, including veterinarian bills and burial or cremation costs.

In addition to those expenses, pet owners can request reimbursement for the cost or fair-market value -- whichever is higher -- of a deceased pet or one purchased in replacement. Owners who don't have documentation of expenses can get as much as $900 each. All claims are subject to review.

The companies said they will donate any money left in the fund after claims are paid to animal-welfare charities.

Settlement details were originally to have been filed in court about two weeks ago, but it took longer to hash out the deal, partly because it had to be made to conform to U.S. and Canadian law.

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Wal-Mart Canada Selects New Ad Agency

Supermarket News
May 22, 2008                                  [back to top]

MISSISSAUGUA, Ontario — Wal-Mart Canada here has selected noted Canadian brand marketer J. Walter Thompson as its advertising agency of record in Canada. JWT replaces U.S.-based Publicis, except in Quebec, where Wal-Mart Canada continues to be represented by Allard-Johnson. Publicis had represented Wal-Mart since its arrival in Canada in 1994. “JWT will be a valuable partner in helping shape our future public and consumer image in Canada,” Vi Konkle, chief customer officer of Wal-Mart Canada, said in a statement. Thompson is perhaps best known in Canada for its work with quick-service restaurant chain Tim Hortons

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Foreign companies defend China earthquake aid

By JOE McDONALD
Associated Press
05.22.08                                     [back to top]

BEIJING - Foreign companies are defending themselves against accusations spread on Chinese Web sites that they are doing too little to help earthquake survivors.

Online comments called for boycotts of McDonald's (nyse: MCD - news - people ), Wal-Mart (nyse: WMT - news - people ), Nokia (nyse: NOK - news - people ) and others - in one case calling them "International Super-Misers" - but companies said they felt no impact.

"We feel very proud of what we've done. We've done a lot," said Thomas Jonsson, a spokesman for Nokia Corp., which donated food, tents and mobile phones for rescuers. On Wednesday, it pledged 35 million yuan ($5 million) for reconstruction.

McDonald's Corp. said it has served more than 40,000 meals to quake survivors and rescue workers and pledged 10 million yuan ($1.5 million) Wednesday to build new schools in quake areas.

"We've been involved in helping and responding since day one," said McDonald's spokeswoman Lisa Howard.

By Tuesday, foreign companies had donated 1.2 billion yuan ($175 million) in cash, plus supplies worth 108 million yuan ($15.5 million), according to the government.

Despite that, nationalistic Chinese Web surfers who react angrily to any perceived slight to their country have accused foreign companies of failing to provide enough help.

A posting on popular search engine Baidu.com (nasdaq: BIDU - news - people )'s blog service listed corporate donations and said they were smaller than those after the 2004 Indian Ocean tsunami.

Comments on online bulletin boards criticized McDonald's Corp., Yum Brands Inc.'s KFC restaurants, Toyota Motor Corp. (nyse: TM - news - people ), Nokia, South Korea's Samsung Electronics Corp. and French retailer Carrefour SA.

Chinese nationalists often have conflicted feelings toward foreign companies, which have helped to fuel the country's economic boom but are seen as rivals to local companies.

Among other companies, Wal-Mart Stores Inc. said it has given food, some 3,000 tents and other aid worth 3 million yuan ($430,000) and added to that by using its distribution network to move supplies to the disaster area.

"We are reacting very quickly in support," said Wal-Mart spokesman Jonathan Dong.

Nokia sent 5,000 mobile phones for use by rescuers and sent employees into the disaster area to maintain them, Jonsson said.

"For us initially the most important thing was to get our relief effort going, and once we had it going we could communicate about it, but some people were quick to think we weren't doing anything," he said. "We've seen these criticisms going away and our efforts being better understood as the days go along."

Copyright 2008 Associated Press. All rights reserved

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Even kids come to fight

Wal-Mart East end worries about loss of good jobs

Peter Kuitenbrouwer,
National Post
Thursday, May 22, 2008                         [back to top]

Leanne Wild, 34, and her daughter Jubilene, 2½ (named for the Hebrew word Jubilee, her mom says) arrived in the grand lobby at 655 Bay St. at about 11:15 a. m. yesterday. Both wore bike helmets; Jubilene wore mittens and little yellow rain boots. The little girl stood on the gleaming granite in the lobby, dwarfed by a cathedral ceiling, and asked: "Mom, can I have an apple?"

With Jubilene in a bike seat, mother and daughter had just rode in from the Gerard India Bazaar along the Dundas and Gerrard streets bike paths. It was an epic journey of sorts, from the little house she bought two years ago, across the river, through rain showers and down busy streets to the corridors of bureaucratic power.

They joined about 100 residents of Leslieville and environs who packed a sterile hearing room on the 16th floor of this building, home of the Ontario Munipal Board, to voice their opposition to a Smart!Centres plan to rezone about nine hectares of employment land on Eastern Avenue for a big-box shopping plaza.

"We're not shop owners," said Ms. Wild, unwinding her long, damp scarf. "We're just residential folks in the neighbourhood. I'm frustrated in general by Smart!Centres and the way they operate. I like the downtown small shops owned by local people."

The city last year turned down the Smart!Centres project; the company appealed to the OMB. Provincially appointed OMB judges have power to overturn council. Yesterday James McKenzie, who presides over this hearing, was outraged when the lawyers told him the case would take 26 weeks. "This is not going to be an open-ended process," he told the 16 lawyers. "Let me disabuse you of that notion right now."

After lunch, the lawyers agreed with Mr. McKenzie to spend 17 weeks on the hearing, and wrap up by Oct. 2. Smart!Centres said its key witness will be Tom Smith, vice-president of development, who has taken his case directly to Torontonians over the past few weeks with appearances on television, radio and in print.

The City of Toronto and Smart!Centres have two lawyers each, as do the East Toronto Community Coalition, Talisker, which owns the BMW dealership near the Don Valley Parkway, Mark Flowers, which owns land east of the disputed property, and Loblaws, which owns a store nearby.

People from the neighbourhood wore black T-Shirts with the slogan "Good Jobs Matter," which the coalition was selling for $20 each. They say they prefer film jobs or other high-paying work to Wal-Mart jobs on the site. Toronto Film Studios is leaving the spot at the end of the year to go to the new Film Port in the port; Wal-Mart is the usual anchor tenant for Smart!Centres.

I asked Dennis Wood, Smart!Centres' lead lawyer, what he thinks of the slogan, "Good Jobs Matter."

"There's a difference of opinion between my client and them about whether good jobs of the kind they're talking about are achievable on that site," Mr. Wood said. "It's the difference between 75% of something and 100% of nothing."

But Brendan O'Callaghan, the City of Toronto lawyer, said industrial and commercial users occupy 94% of the land from the Don River east to Coxwell Avenue, from Eastern Avenue to Lakeshore Boulevard, including Canada Post's mammoth South Central processing plant and the Lever factory. He says rezoning land in the heart of this area for retail could cause all the others to rezone and close factories.

"It's a tremendously successful employment area," Mr. O'Callaghan said.

A win for either side may well not be the end of the story. Eric Gillespie, lawyer for the local residents, noted that his firm fought Smart!Centres for 10 years to keep Wal-Mart out of Guelph. In the end Smart!Centres settled, building a berm to protect a local Jesuit seminary from its big box, he said.

"The Jesuits just announced that they are going to begin a reforestation project that will take 500 years," Mr. Gillespie said. So I guess the mitigation measures have worked."

But as he spoke, I could see the wheels turning in the head of his client, Kelly Carmichael, who heads the community coalition. "Ten years," she was thinking. "I'll have to sell a lot of T-shirts."

The hearing continues at 10 a. m. today.

Copyright © 2007 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.

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Wal-Mart rang up $2.2M in 1Q government lobbying

Associated Press
05.20.08                                        [back to top]

WASHINGTON - Wal-Mart Stores Inc., the world's largest retailer, spent $2.2 million in the first quarter to lobby on consumer product safety legislation and a host of other issues, according to a disclosure report.

In the last five months, the House and Senate have passed their versions of legislation that would toughen inspections of toys and other products made outside the United States, in response to millions of recalled products that have sickened children. Both bills increase penalties for companies that violate safety rules and increase funding for the Consumer Product Safety Commission.

Wal-Mart (nyse: WMT - news - people ) has said it has implemented certain safeguards of its own, including independent laboratory testing for products it sells. A top company lobbyist also said the company would follow whatever new federal rules are enacted.

The Bentonville, Ark.-based company also lobbied the federal government on immigration reform, climate change and renewable energy legislation, the farm bill and food safety, health, labor and corporate tax issues, digital television matters and a bill that would make organized retail crime a federal felony.

In the January-to-March period, Wal-Mart lobbied Congress, White House, U.S. Trade Representative's office, and several other departments, including Commerce, Energy, State and Health and Human Services, according to the report filed April 21 with the House clerk's office.

Copyright 2008 Associated Press. All rights reserved

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Wal-Mart settles whistleblower case, terms not disclosed

Associated Press
05.20.08                                    [back to top]

FAYETTEVILLE, Ark. - An employee in Wal-Mart's labor relations department has settled her discrimination lawsuit with the world's largest retailer.

Rita Miles sued in 2006, saying she was harassed and given poor evaluation scores because she refused to shred documents relating to the investigation of Tom Coughlin, a former vice chairman convicted of fraud.

The terms of the settlement filed Friday in U.S. District court in Fayetteville weren't disclosed. The suit was dismissed with prejudice, meaning it cannot be refiled.

Miles' suit against Wal-Mart Stores Inc. (nyse: WMT - news - people ) claims that the Bentonville-based retailer violated the Sarbanes-Oxley Act, passed by Congress in 2002 after corporate scandals at Enron Corp., WorldCom Inc. and other companies.

The suit claimed that Miles was told to destroy hard copies of documents relating to the investigation of Coughlin, who has been sentenced to home detention after pleading guilty to stealing money, merchandise and gift cards from the retailer.

Wal-Mart has said that the company kept copies of all documents requested by the U.S. Department of Justice subpoena in the Coughlin case.

Dauphne Moore, a spokeswoman for Wal-Mart, wouldn't say whether Miles was still employed at Wal-Mart.

"The case has been settled and the terms are confidential," she said.

Copyright 2008 Associated Press. All rights reserved.

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A Wal-Mart supplier accused of sweatshop

By Jian Wen ,
China Real News
May 19th, 2008                       [back to top] 

Hsing Toys (Shenzhen) Co., Ltd., a supplier of Wal-Mart (NYSE:WMT) , has been accused of sweatshop conditions. At Tai Hsing, workers are forced to work at least 66 hours per week with very low pay. According to some experts, Wal-Mart's low-price purchasing strategy is based on suppliers' exploitation of Chinese workers.

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Wal-Mart moves forward with new Marketside stores

Reuters
Fri May 16, 2008                         [back to top]

NEW YORK (Reuters) - Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research)is now hiring store managers to work at Marketside, new smaller format stores the world's largest retailer is preparing to open in Arizona.

Marketside is described as "the neighborhood market for busy people with a taste for fresh and delicious food."

Last year, Wal-Mart's British supermarket rival Tesco (TSCO.L: Quote, Profile, Research) entered the U.S marketplace, opening Fresh & Easy Neighborhood Markets stores in California, Arizona and Nevada. Tesco is seeking to woo U.S. shoppers with smaller convenience stores that emphasize ready-to-eat meals and fresh produce.

Wal-Mart has launched www.workformarketside.com, a website that currently lists eight job openings for Marketside managers and assistant managers in four Arizona cities.

The site says Marketside will "simplify the daily challenge of creating an enjoyable meal by providing inspiring choices, while also offering everyday favorites at great prices in an easy-to-shop environment."

Wal-Mart, whose No. 2 British supermarket chain Asda competes with No. 1 Tesco in the United Kingdom, has long been expected to open a new, smaller store concept that would rival Tesco's stores in the States.

Wal-Mart is now working on launching the convenience store-sized markets in four cities southeast of Phoenix.

Store application plans call for the stores to occupy roughly 15,000 square feet. That is less than half the average size of Wal-Mart's Neighborhood Market grocery stores, and a small fraction of the size of its Supercenters, which combine grocery stores with general merchandise and can be more than three times the size of a U.S. football field.

A story in the Financial Times said on Friday that Marketside locations will prepare and serve food, and include a kitchen, food counters and seating for up to nine people.

Wal-Mart spokesman Nick Agarwal said the retailer tests lots of different formats.

"We'll no doubt announce more in due course but not at this stage," he said of the retailer's plans for the new stores.

(Reporting by Aarthi Sivaraman and Nicole Maestri, editing by Will Waterman and Steve Orlofsky)

© Thomson Reuters 2008. All rights reserved.

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The Emergence of Real Trade Unionism in Chinese Wal-Mart Stores

Chinese Labor News Translations
Reported by Big Box Collaborative http://www.bbc.wikispaces.net/CampaignerEmail14May08  [back to top]

The trade unions in Chinese Wal-Mart stores are often dismissed as hollow shells set up by the All China Federation of Trade Unions (ACFTU) without workers' involvement. But through monitoring Chinese media and online blog discussions among Chinese Wal-Mart employees, CLNT has found workers who take an active interest in their store union, and at least in one case, of an elected rank and file trade union chair using the trade union platform to actively defend workers' interests. While most – if not all – of the trade union branches are heavily dominated by Wal-Mart management or local governments, some workers have seized this union-building exercise and try to turn the unions into a body that they identify as their own to protect and to use in their struggle against Wal-Mart management.

Background

There were two stages of union-building at Wal-Mart. Unionization at the first 17 stores was initiated by the ACFTU, in July and August 2007. Most of these 17 involved ACFTU quietly organizing rank and file employees. The ACFTU approached workers after work hours outside the stores and mobilized them to submit an application to set up a union branch. These efforts had culminated in democratic elections of trade union committees and trade union chairs by workers willing to take the risk to put themselves forward as candidates. Such election often took place in the early hours of the morning without Wal-Mart's knowledge. When these unions sprang up one after another for the two weeks Wal-Mart was taken aback and refused to recognize them.

Wal-Mart then seeing the problem if this trend was to continue, changed its stance and decided it was better to have the ACFTU working with it than against it. It approached the ACFTU and negotiated to sign a memorandum which allowed for trade union branches to be openly established at the remaining of its 60 Chinese stores (see CLNT March 2007). After this, the ACFTU abandoned its surreptitious organizing efforts and reverted to its long-time practice of seeking management approval when setting up union branches and union committees. Reports from the China press describing the establishment of these union branches clearly showed that this allowed Wal-Mart to intervene and manipulate the operations of the union branches, sometimes reportedly with the connivance of pro-business local Party branches and district trade unions. Today China has just over 100 Wal-Mart stores, and all of them presumably have trade union branches.

There has been curiosity in China and abroad to know what is happening within these Wal-Mart union branches. ACFTU's critics have presumed that all of the branches will be quiescent stooges of Wal-Mart and the ACFTU. For instance, Han Dongfang, director of China Labor Bulletin in Hong Kong, in a recent speech in Los Angeles ridiculed these Wal-Mart unions as a mere window-dressing exercise.

A search of Chinese websites and web blogs reveals a mixed but encouraging story. Although many of the Wal-Mart Trade Unions are indeed under the control and manipulation of Wal-Mart management and local Communist Party organs, at least one has been negotiating with management to remediate labor rights violations and to improve the income and work conditions of its members. Our regret is that based on these web searches alone it is not possible to establish how many have really taken action to further workers' interests.

We have selected four cases of Wal-Mart trade union branches to illustrate the various situations faced in the 100 branches. At least three of these (possibly all four) belong to the first batch of branches set up secretly before 16 August 2006.

These four cases fall under two categories: unions controlled by the Wal-Mart management and/or the local Communist Party resulting in inactive union branches (Cases 1 & 2), and unions in which the membership treat their union branches as their own and resist being controlled by outside forces and corrupt officials (Cases 3 & 4).

Case 1. Union branch controlled by Wal-Mart management Shenzhen Jiali Center Wal-Mart Store #3424

Based on two blogs written by workers from this store, it is unclear whether the union was set up without management's knowledge or openly. It seems that the original union committee was not completely under management control, but has become so after a series of manipulations by management, such as by replacing elected trade union committee members with management staff. This is why the website contains a cry for help; "It's over! It's over! Come and save this Wal-Mart trade union!" It is likely that Wal-Mart was able to dominate the branch with the silent consent of the local Party, which moved into the store to set up a Party branch on 14 December 2006.

Case 2. Union branch controlled by the Chinese Communist Party Shenyang Taiyuan Street Wal-Mart Store #5780

This Wal-Mart union branch in Shenyang City in the North-east province of Liaoning has been hailed by the Party as a success story because it was the first Wal-Mart store in China to have a Party branch. The trade union branch was set up without Wal-Mart's knowledge in the small hours of the morning of 12 August 2006; and four days later an "underground" Party branch and Youth League branch were set up. The trade union branch was quickly controlled by the Party, which declared it was "not intervening in the work of foreign enterprises", i.e., the Party branch would make sure it that the union branch did not interfere with management. Reading between the lines, it is obvious that the trade union only performs some formalistic functions at the store. This case reflects the government's stated goal to "setting up trade union branches to facilitate the setting up of Party branches".

Case 3. Trade union members struggling against corrupt elected union officials Shenzhen Hujing Wal-Mart Store #2701.

The Hujing Wal-Mart Store trade union was also set up secretly. It was in fact the second store in China and the first in Shenzhen City to have a union branch. It was a time when joining the union and running for office was a risky undertaking. But Zhou Liang, an ordinary worker stepped forth and got himself democratically elected. The blog translated here indicates that he and the elected accountant soon became corrupt, embezzling trade union funds, lording over the workers and doing nothing. The members are now trying to get rid of them and to re-organize a new committee. An interesting point to note about this case is that the trade union members, having elected their representatives (as opposed to being appointed by management or by an upper level of the trade union or by the Communist Party), insisted that they be held accountable. The experience of electing union cadres of their own choice has arguably created a sense of ownership over the union, and feel they have the right to dismiss these representatives when they did not live up to the expectations of their constituency. A few employees are willing to organize an investigation committee and signature campaign to get rid of Zhou and the accountant, despite encountering enormous pressure from Wal-Mart management during work hours.

Case 4. Trade Union struggling against Wal-Mart management Nanchang Bayi WM Store # 5782.

The Nanchang Bayi trade union was clandestinely set up on 14 August 2006. The chair, Gao Haitao, was elected by popular vote. Since then he had fought against Wal-Mart management over one issue after another. It is significant that he had studied law on his own while supporting himself by working at Wal-Mart part-time. In 2005 he passed a nation-wide examine in law and decided to stay on in Wal-Mart as a full-timer. His legal knowledge became his main weapon to fight against Wal-Mart.

We have translated a very long blog related to this case that includes two articles that provide the background information on Gao and the struggles he has been going through (Click here to view translation: CLNT_WMTU_nanchang_blog). But just as interesting are the large number of comments (including a few from supervisors and managers) from Wal-Mart stores all over China that support him, hailing him as a genuine trade union leader. Some suggest that he should organize and train the trade union chairs in all of the other Wal-Mart stores. Many address him respectfully as "Chairman Gao" though he is not their union chair and is in fact just a young rank and file worker in one of the many stores. There are also suggestions for collective actions. One, for instance, suggests that they start collecting funds, and one writes that he is willing to contribute 100 RMB a month of his cigarette money to start a union fund.

It is alleged in this blog that Wal-Mart has tried one trick after another to control Gao. One attempt was to get the city level union on be on its side, and then to create a so-called union working committee at city level headed by a manager to override the workplace unions of the three Wal-Mart stores in the city. Gao refused to go along with this and sought help from the ACFTU in Beijing, which supported Gao and overrode the decision of the city-level union.

In two instances, Gao fought management against unfair dismissal and succeeded. This was seen as so unusual by other workers that membership suddenly jumped many fold.

Being required by the Trade Union Law to pay two percent of the total payroll to the workplace union as union activity fees, Wal-Mart tried to retrieve this expense by skimping on bonuses and an annual holiday gift. This provoked Gao to write an open letter to trade union members that argued against shifting the responsibility of workers' welfare onto the union (Click here to view translation: CLNT_WMTU_nanchang_letter ).

It has become a pattern that whatever Wal-Mart management does, the city-level union seconds it. Time and again Gao had to seek help from the ACFTU in Beijing to issue instructions to overturn the city union's decisions. Gao openly laments the stance taken by the middle levels of the union. It is rare for a low-level trade union chair to engage in this type of frank criticism.

The comments made in the blogs bring out clearly that most workers in China do not totally dismiss the ACFTU. They can be disappointed and cynical about Chinese trade unions, but there is no mention of a desire to set up an independent trade union. When given the space to struggle against management through existing legal and institutional structures, if competent and committed leadership emerges they are willing to rally around it. These blogs are important vehicles for self-expression, exchanges of information and ideas, and discussions about collective action.

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NFL Star: Wal-Mart Left Kids Out in the Cold

TMZ
May 14th, 2008                    [back to top]

NFL superstar Andre Johnson claims his charity got stiffed by Wal-Mart -- it all involves water and ice. Yes, ice.

Johnson ordered 750 bicycles to be given to underprivileged kids at an event sponsored by the Andre Johnson Foundation -- in return for the purchase, Wal-Mart agreed to donate water and ice for the May 3 event.

But there was a problem with the order, so Johnson ended up buying fewer bikes than planned. Wal-Mart countered by not giving the water and ice as promised. That's cold.

Wal-Mart is trying to rectify the situation. They tell TMZ, "We are reaching out to the Andre Johnson Foundation as we speak to rectify the situation. It's disappointing that this happened."

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Wal-Mart and the Chinese Earthquake: Cheap Help for A Cheap-Labor Country

by Phil Mattera
www.dirtdiggersdigest.org
May 14, 2008                                             [back to top]

Wal-Mart Stores has put out a press release patting itself on the back for promising the equivalent of about $430,000 for disaster relief and reconstruction for the area of China hit by a massive earthquake this week. The gesture was laudable but the amount was less than impressive. After all, the giant retailer would be nowhere today without the countless Chinese workers who toil in sweatshops so that American consumers can be offered the cheap goods that are at the core of the company’s business model. Last year those largely Chinese-made goods brought Wal-Mart profits of $12.7 billion, or about $1.4 million every hour of every day. The $430,000 contribution thus represents less than 20 minutes of profit. Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in China (through joint ventures and minority-owned subsidiaries), several of which have been shut down because of the tremblor. Wal-Mart was so eager to operate stores in China that it agreed to let its employees there be represented by unions (though of the government-dominated variety). Wal-Mart has a history of using relatively inexpensive amounts of disaster relief to boost its reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005, Wal-Mart maneuvered to get maximum exposure for its prompt delivery of relief supplies. A fairly routine operation for a company possessing the most advanced logistics infrastructure was seen as nearly miraculous, given the ineptitude of federal and state public officials. The company made an initial faux pas (quickly reversed) in announcing that employees at its stores shut down by the storm would be paid for only three days. It also started out offering a measly $2 million in relief but soon overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of its army of p.r. operatives from Edelman and a conservative blogger who was paid to tout Wal-Mart’s hurricane work in the blogosphere. Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.

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Cities may mute effect of Wal-Mart

By Sandra M. Jones,
Chicago Tribune
May 13th, 2008                          [back to top]

Wal-Mart Stores Inc. appears to have played a role in putting some retailers out of business since opening its first Chicago store in Austin more than 18 months ago, but the effect on its smaller rivals is likely milder than what occurs when the giant store arrives in a rural town, according to initial findings of a new study.

Researchers from Loyola University Chicago and the University of Illinois at Chicago tracked 191 stores within a three-mile radius of Wal-Mart from March 2006, six months before the store opened, through November 2007. The team found 23 stores, or 12 percent, of the businesses in the study group shut down last year.

Their preliminary conclusion is that a "small but statistically significant relationship" exists between local companies going out of business and Wal-Mart's arrival in the city. The researchers cautioned they are "hesitant to draw any strong conclusions" until a third phase of research is completed later this year.

For more than two decades, academics have studied Wal-Mart's effect on small-town America, but little is known about how Wal-Mart affects jobs, wages, property values and sales in an inner city.

The world's largest retailer has been moving into big cities and stirring controversy, especially in the union-dominated North. The researchers claim this is the first empirical study of the local economic impact of a Wal-Mart in a large city.

"People have their opinions on Wal-Mart," said Phil Nyden, director of the Center for Urban Research and Learning at Loyola in Chicago. "The idea is to get some actual data to inform the debate."

In a bid to win over critics worried about the giant retailer driving out mom-and-pop stores with larger selections and lower prices, Wal-Mart launched an unusual program last year in 10 inner cities, starting in Chicago, aimed at helping local retailers near its urban stores. It offered to pay for local newspaper advertising and to showcase the independent stores on Wal-Mart's in-store TV network and donate funds to the local chambers of commerce.

Called "Jobs and Opportunity Zones Program," it received mixed reviews. Wal-Mart detractors called it a publicity stunt. And some participants said the program didn't make much of a difference in their day-to-day business.

According to the Chicago study, there is some "limited" evidence stores located closer to Wal-Mart are more likely to go out of business than those farther away within the three-mile radius.

Many of the stores that closed last year sold clothing, beauty supplies and shoes, all items available at Wal-Mart.

Lawrence LeBlanc, owner of LDL Furniture and Appliance, said sales at his secondhand-goods store just down the street from Wal-Mart have fallen dramatically since the discount chain came to town. The little shop had been generating about $130,000 to $140,000 in sales a year before Wal-Mart. Last year it rang up $35,000. The only reason LeBlanc has kept the store open, he said, is that he owns the building.

"I used to be able to sell 15 to 20 televisions a month," said LeBlanc. "Now I sell two or three."

On the other hand, Norman Delrahim, owner of B&S Hardware nearby, said that after an initial drop-off in sales, he thinks business is "a little better" as shoppers come to the neighborhood to visit Wal-Mart and notice his store.

Wal-Mart said it is attracting new business to the area, such as the Menards home improvement store going up across the street.

"There is a lot of development that has come into the area," said Roderick Scott, senior manager of public affairs for Wal-Mart in Chicago. "We've been a positive agent in that change."

The Bentonville, Ark.-based retailer opened a 142,000-square-foot discount store in the Austin neighborhood on the West Side in September 2006. It planned to open as many as 20 stores in the city, most of them Supercenters that also sell groceries.

Unions, angling to get non-union Wal-Mart to pay its workers more in wages and health benefits, fought to keep Wal-Mart from expanding in the city. Last month the city struck down a request to allow Wal-Mart to open a second store at Chatham Market on the South Side.

Researchers plan to learn more about Wal-Mart's effect on jobs and wages as they complete the final phase of the study. The last wave of data collection began in March 2008 and runs through November 2008. The study is financed by Woods Fund of Chicago, a foundation that helps the poor.

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Wal-Mart Reaches 2 Million Workers

Associated Press
May 13th, 2008                              [back to top]

LITTLE ROCK, Ark. (AP) _ Imagine Houston being populated only by Wal-Mart workers.

Houston proper, with its population of just over 2 million, has about the same number of people as Wal-Mart Stores Inc. now employs worldwide.

Put another way, if a city had only families of four and one member of each household worked at Wal-Mart, that would be a perfect fit with the 8 million-strong population of New York City, a market Wal-Mart happens to covet.

During a recorded call with investors Tuesday, Wal-Mart President and CEO Lee Scott mentioned offhandedly that the company now has more than 2 million "associates," as Wal-Mart terms its employees. Chief Financial Officer Tom Schoewe confirmed in an interview that Wal-Mart had reached the milestone.

The world's largest retailer is also the world's largest private employer. The company has about 1.3 million U.S. workers. As of April 30, Bentonville-based Wal-Mart had 7,343 units - 4,195 in the U.S. and 3,148 in its international division, which includes Puerto Rico.

(Copyright 2008 Associated Press. All rights reserved.

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Wal-Mart profit rises 6.9 pct, beats Street view

Associated Press
05.13.08                                  [back to top]

BENTONVILLE, Ark. - Wal-Mart